When people refer to stress management they usually talk about stress balls to squeeze, getting a massage, or taking a pill. When we talk about debt management it means we can’t squeeze another penny out of our pocket for the bills, massage our accounts to work in our favor, and there most certainly isn’t a magic wand or pill to solve the problem. So when we are in trouble with our finances, because the multiple bills are too much to handle and the interest rates sky rocket, what do we refer to it as? Debt Consolidation.
Debt consolidation happens when you have decided to reduce the number of unsecured loans into one secure loan. For example, you may have a personal loan, a couple credit cards and a few medical bills. Instead of paying for each one individually you can combine them into one lump sum. It saves on the stress of bill collectors calling and the demand letters in the mail. It relieves the pressure of keeping track of so many bills each month. Debt consolidation should also lower your monthly interest rate. When you research the different providers, make sure their fees don’t outweigh the lower interest rate.
A few different ways to consolidate:
- Home Equity Loan: lower interest rate and tax deductable.
- Personal Loan: higher interests and found at your local bank.
- Student Loan Consolidation: talk to your lender.
- Cash Out: refinance your home for more than you owe.
No matter what you do to manage your debt, make sure you’re making the best use of your hard earned income. No one said finances were easy but if you go about it the right way, you can stay ahead for your future.
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